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Convergent Commercial
Quarterly
August 2012
Convergent Commercial
Quarterly
Welcome
Welcome to the summer edition tain while at the same time
of our newsletter. With the ex- helping your business. As you
treme weather most of the plan ahead, please take note of
Special points of interest: country has been experiencing this edition’s cartoon to avoid
we hope you have found ways the mistake those two gentle-
to stay cool. men made.
Reduce DSO We have included a few timely Most of our clients are still
Lessons for Credit Execs articles you may find of interest. greatly affected by the fallout
One relates to hacker scares, caused by this historic reces-
Driving History very appropriate in view of the sion. We are here, as we have
recent doomsday predictions been for over 50 years, to help
Client Secrets at Risk about virus attacks. With the in any way we can. Thank you
Summer Weight Loss Se- popularity of barbeque season for entrusting CCI with your
crets we thought our health section accounts and please contact us
should focus on some good with any questions or sugges-
ideas to make your indulging tions you may have.
more guilt free.
- Dennis Casey,
As usual we try to share articles
we hope will educate and enter- Vice President
New York City at Greatest Financial Risk from Hurricanes: CoreLogic
purposes, the area also includes Long Still, the risk is there, particularly from
Island and northern New Jersey. flooding. While most people associate
hurricane damage with wind, the storm
“The summer of 2011 gave us some surge from rising waters caused by cy-
startling insight into the damage that clones has just as much impact, if not
even a weak storm can cause in the New
more.
York City metro area,” CoreLogic vice
president Howard Botts said. That was painfully evident to residents of
the northeastern states in particular
“Hurricane Irene was downgraded to a after last summer’s Hurricane Irene.
When people think of hurricane damage tropical storm as it passed through New
they usually think of Miami or New Or- Although the insured impact of Irene on
Jersey and New York City, but the impact the New York City area was relatively
leans, but a new report suggests the of the storm was still estimated at as
greatest financial risk of all may be much limited, one of the insurance industry’s
much as $6 billion.” nightmares has always been a major
farther north: the greater New York City
It is much more likely that a hurricane hurricane traveling up the Hudson River
area.
will make landfall in Miami than New and striking the city and its environs.
Data analysis firm CoreLogic said in a York. In 2012, according to landfall ta-
new report released on Thursday that By some estimates, such an event could
bles from Colorado State University, the cause $100 billion just in insured losses,
the U.S. metropolitan area at greatest odds are 5.3 percent for Miami and 0.2
risk, both in the number of properties with economic damage some order of
percent for New York City. Over 50 years,
affected and the potential value of dam- magnitude greater than that.
the odds rise to 95.5 percent for Miami
age, was New York City. For the firm’s and 6.6 percent for New York. (Continued on page 2…)
Page 2 Convergent Commercial Quarterly
Volume 2, Issue 3
New York City at Greatest Financial Risk from Hurricanes: CoreLogic (cont…)
CoreLogic estimated the property at risk There are 2.2 million homes worth more firm said. In terms of value of property,
in the New York City area was worth than $500 billion at risk along the Atlan- more than 40 percent of the risk is con-
some $168 billion. tic coast, with another 1.8 million homes centrated in Florida and New York.
worth $200 billion imperiled along the
In total, CoreLogic said, more than four Source: Insurance Journal
Gulf coast.
million homes in the United States are at
risk from flood damage related to hurri- About 35 percent of the at-risk homes
canes, with over $700 billion in property are in the state of Florida alone and an-
potentially vulnerable. other 12 percent or so in Louisiana, the
Reduce DSO With Proactive Invoice Dispute Prevention
With days sales outstanding (DSO) at Complex pricing 4. Classify the specific problems that
record levels (now averaging 42 days in are resulting in revenue leakage.
the U.S., according to Gartner Group), AR Duplicate invoices These might include: inaccurate
professionals continue to focus on quotes; price discrepancies; con-
strategies to accelerate cash. In doing Discount terms signment and inventory write-
so, a key question to ask is: What are the downs; ship to, tax code, and other
root causes of late collections? For most Change orders logistics issues; contract compli-
companies, it turns out, the cause of Duplicate/split orders ance penalties; late pay from inac-
slow payments is not credit-related at all, curate invoices that fail customers'
but rather lies with defective invoices Blanket POs AP reconciliation; unauthorized de-
sent by trade vendors. ductions; unearned early pay dis-
Warranty entitlements counts; un-reconciled returns proc-
Defective invoices (invoices that don't
esses; and receivables write-offs.
reconcile) account for nearly two-thirds Freight rules
(63 percent) of past-due payments, ac- 5. Consider the ROI of automation
cording to SunGard research, far ahead Steps to reduce disputed invoices solutions. Process automation built
of customers unwilling to pay, defective AR's job is to determine which of these around invoice dispute prevention
deliveries, or customers unable to pay root causes are causing disputed in- features functions like: auto-
because of bankruptcy or other reasons. voices — and therefore delayed pay- validation of policies and rules; ex-
Defective invoices take, on average, two ments — at your company. ception-based management; inte-
to three times longer to be paid than grated workflow; and reporting and
clean invoices. 1. Start by assembling one or two root-cause analysis. Whereas a
months' worth of invoices and con- manual process typically spot-
It doesn't take a genius to appreciate duct a study to determine the com- checks 10 percent to 15 percent of
that figuring out how to reduce the num- pany's defective-to-clean invoice all transactions, an automated proc-
ber of defective invoices being sent out ratio. ess quality checks them all.
by AR — and thus minimizing invoice
disputes — is crucial to reducing your 2. Next, sort out the defectives by cate- Whether or not you can convince your
DSO. gory, using the list above, to get CFO to fund such a solution — and suc-
insight into where upstream you cess will depend on presenting a com-
Reasons for past-due invoices need to look to turn the situation pelling ROI case — AR also needs to build
The goal of AR must be to go "upstream" around — and which departments a process that will manage the constant
in the quote-to-order process to discover you need to collaborate with to do changes in pricing, promotion, and ways
the principal root causes of your defec- so. Secure top management sup- of doing business today that add a fur-
tive invoices so you can minimize or port for approaching this challenge ther challenge to eliminating defective
eliminate them before they ever get out as a cross-functional, not narrowly invoices.
the door (or are transmitted electroni- AR, task.
cally). 3. Examine the key stages in the quote
Potential root causes of defective in- -to-cash process — quote, order
voices are many and can include: management, manufacturing, logis-
tics/delivery, invoicing, collections,
Invalid PO numbers returns, and cash application — to
locate the stage at which invoice
Inaccurate billing details errors are being generated, and
document these.
Over-shipments or under-shipments
Page 3 Convergent Commercial Quarterly
Volume 2, Issue 3
Lessons for Credit Execs From an NFL Ref
At one of the dinners I attended at last Quality Control - Measure What's Im- refs. No adrenaline. Nothing.
week's NACM Credit Congress in Dallas, I portant - All refs are evaluated and
was lucky enough to be seated next to an Instead, he explained, all he sees is a
graded continuously.
outsourcer who just happened to be (in dark jersey and a light jersey and
addition to his day job) an NFL ref. And not Don't Be a Clock Watcher - During that's it.
just any NFL ref, but one who has reffed in football season, because of the de-
manding schedule, travel, and his Protect Your Staff From Harm - After a
three Super Bowls. Being an inquisitive game, refs shower, change, and are
sort, and, like about 80 percent of the regular business, he works 80-90 hour
whisked away very quickly from the
population, a fan, I asked a lot of ques- weeks.
stadium to the airport to head home.
tions. It was an enlightening and fascinat- Preparation as a Way to Escape Harm This protects the refs and avoids any
ing conversation about what is most surely - I asked if he was ever hurt. After all, opportunity for questioning, second-
a demanding way to spend your Fall week- refs stand on a field with 300-plus guessing, or controversy.
ends. pound athletes moving in all directions
at full speed, trying to outwit and Source: Credit Today
It was very clear that these guys don't mess
around. Being an NFL ref is a great privi- pound their opponents.
lege and on such a big stage, there can be His answer: the only way you get hurt
no resting on laurels. Here are my notes on is if you aren't prepared. Preparation is
our conversation. the key; knowledge of the game and
Continuous Learning - Each week, they what's going on around you are your
arrive a day early at the city where their protection. Same thing in credit, where
game is (they learn their schedule at most the corollary of "getting hurt" is proba-
three weeks in advance). They meet and bly losing one's job. There are risks
take a 10-question quiz and then go over everywhere, but preparation is a great
the answers and discuss them. Yes, each way to stay safe.
WEEK. Execute Based on Principle, No Matter
Work as a Team - During the regular sea- the Situation - As a fan, you might
son, refs are assigned to crews on the the- think that the opportunity to ref in a
ory that working together allows them to Super Bowl would get you pumped up.
better anticipate what the rest of the crew Maybe like the players, the refs are
perhaps more "on" than ever on such
might do.
a big stage? In fact, nothing is further
When the Money's Really on the Line, Use from the truth. A ref can never allow
Your A Players - Despite the above, two the game atmosphere (big or small) to
games in the playoffs, the NFL chooses affect him. All the cheering, hype and
only the highest rated refs for the games. excitement have no impact on the
Driving History Seen as Predictor of Individual’s Lifespan
It appears that bad drivers live shorter lives are a predictive data source of an age groups and genders. Generally,
than good drivers and not just because individual’s all-cause mortality — women have a lower incidence of ad-
they get in accidents. meaning one’s likelihood of dying in verse driving records. However, the
general, not just in a vehicle. relationship between all-cause mortal-
The same motor vehicle driving records ity and major violations is more pro-
already widely used to help determine how The researchers found that individuals nounced for women than men.
much a consumer pays for car insurance with major violations, such as alcohol- Women with major driving violations
can also be used to predict the potential related infractions and excessive face 100 percent greater all-cause
length of an individual’s life. According to a speeding, have all-cause mortality mortality rates than women who do
new study, motor vehicle records shed new rates that are 70 percent higher than not; men with major violations have
light on lifestyle risk and can help life insur- individuals who do not. 61 percent higher all-cause mortality
ance executives, actuaries and underwrit-
Additionally, the presence of six or rates than men who do not.
ers better structure insurance policies in
more driving violations on an MVR
the U.S. Source: Insurance Journal
elevates an individual’s all-cause mor-
The Motor Vehicle Record (MVR) Mortality tality rate by 80 percent.
Study completed by LexisNexis and RGA
Reinsurance Co. analyzed more than 7.4 The researchers say the trends discov-
million MVR requests and determined they ered in the study also apply across all
Page 4 Convergent Commercial Quarterly
Volume 2, Issue 3
Client Secrets at Risk as Hackers Target Law Firms
Think knowing how to draft a contract, file “The challenge is not the laptop, the years ago people were not thinking
a motion on time and keep your mouth iPad or whatever,” said Carlos Rodri- about along these lines,” said Gregory
shut fulfills your lawyerly obligations of guez, manager of network infrastruc- Fayer, now a partner at Fayer Gipson
competence and confidentiality? ture and security for the Midwestern LLP. “I think the key is to be alert and
law firm Lathrop & Gage LLP. “The be aware.”
Not these days. Cyberattacks against law challenge is protecting the data… the
firms are on the rise, and that means attor- smaller the firm gets, the more diffi- That sort of internal vigilance could
neys who want to protect their clients’ se- cult it gets for them to put the proper soon become a professional duty for
crets are having to reboot their skills for lawyers. A handful of bar associations
controls and to educate the firm.”
the digital age. across the country have told their
The FBI doesn’t keep statistics on law members that keeping up with tech-
Lawyers sling millions of gigabytes of confi- firm cyberattacks, and few firms are nology and taking reasonable steps to
dential information daily through cyber- willing to publicly disclose a breach for protect client information from being
space, conducting much of their business fear of damaging their reputations. For stolen are part of lawyers’ ethical obli-
via email or smartphones and other mobile instance, hackers reportedly targeted gations.
devices that provide ready access to docu- Canadian law firms in 2011 in connec-
ments. But the new tools also offer tempt- tion with a potential takeover of a Later this summer, the American Bar
ing targets for hackers, who experts say Chinese state-owned chemical and Association is expected to weigh in on
regard law firms as “soft targets” in their fertilizer group, but none of the firms whether to incorporate such require-
hunt for insider scoops on mergers, pat- involved in the deal have acknowl- ments into its model rules of profes-
ents and other deals, as WSJ detailed in edged a breach, the Globe and Mail sional conduct, which aren’t binding
this Monday’s Law Journal. but often serve as a guide for state
reported back in March.
bar associations.
Now lawyers are being asked to encrypt One lawyer whose firm was targeted in
emails, lock up their smartphones and 2010, during a lawsuit over alleged To help spread the word, the Interna-
iPads with bust-proof passwords, and think software piracy, said he spoke up to tional Legal Technology Association
twice before shooting off a reply to that help warn others of the growing dan- has launched a new security initiative
corporate client who’s traveling in a country ger of such unwanted intrusions. “Ten called LegalSEC that will put together
where internet communications are a set of best practices to protect
routinely monitored. Even text mes- information and technical advice
sages to lawyer smartphones could for attorneys, law firms and law
link to malware that records your key- departments.
strokes or conversations, says Eric
Friedberg, co-president of Stroz Fried- Source: The Wall Street Journal
berg, a digital risk-management and
investigations firm.
Summer Weight Loss Secrets from the Grill
By: the Editors of Men’s Health fat ratio. Try flank steak. With only 176 Whole Wheat Sandwich Thins. Each
calories per 4-ounce serving, flank is bun provides an impressive 5 grams
Sizzling Secrets one of the leanest cuts at the meat of fiber in only 100 calories. Your
Don't Fear Red Meat counter, and it offers an impressive 24 tastebuds won't know the difference,
grams of protein. but your waistband will!
A 2010 study in the New England Journal
of Medicine found that a diet high in pro- Switch to Whole Grain Buns Add Spice
tein and low in processed carbs was the A 2008 study in the American Journal The best fat-fighting spices are chili
most effective for weight loss, and the B of Clinical Nutrition found that a diet and cayenne pepper. A 2011 study in
vitamins in meat help your body convert high in whole grains resulted in a the Journal of Food Science and Nutri-
nutrients into energy. Another perk of greater decrease in body fat tion found that capsaicin—the spicy
protein? Your body also has to work (particularly around the belly) than a compound found in the peppers—
harder to digest it, so when you eat, say, a diet high in refined grains. The whole- promoted weight loss in a group of
steak, you stay fuller longer than you grain dieters also saw a 38 percent overweight rats.
would if you ate a bagel. The key is to cut decrease in C-reactive protein (CRP), a
down on the greasy ribs and switch to marker of inflammation. The best low- (continued on page 5…)
lean cuts, which have a higher protein-to- calorie option? Arnold Select 100%
Page 5 Convergent Commercial Quarterly
Volume 2, Issue 3
Summer Weight Loss Secrets from the Grill (cont…)
Capsaicin has also been shown to sup- tion Labels for Beef.) This is good SINISTER SIDES: The quickest way to
press appetite, boost metabolism, and fight news. An 8-ounce rib eye, raw, could turn your lean slab of meat into a diet
inflammation. Try mixing the cayenne with easily have more than 550 calories disaster? Pair it with a fat-filled, calo-
cumin, garlic powder, salt, and pepper and and 18 grams of saturated fat, but rie-loaded side dish. Sides should
rubbing it on a steak before grilling. you'd never know before the USDA's support your healthy meal, not tear it
ruling. Now you can see with a glance down, but apparently some chain res-
Upgrade Your Barbecue Sauce that by switching to round steak, the taurants missed the memo. Check out
According the American Heart Association, calorie damage dips to about 375 the 10 Worst Side Dishes In America.
the average American downs a whopping calories with only 7 grams of saturated
22 teaspoons of sugar every day. That's fat. Those numbers vary from steak to
335 calories, enough to add 37 pounds in steak though, so take advantage by Trim Fat
a year! Much of this sugar comes from scrutinizing meat labels before any
sources like sodas—which is why you purchase. (To reap the full nutritional Seems obvious, right? But consider
should avoid washing your burger down benefits of your DIY burger, follow the the impact: By trimming a quarter-inch
with any of the 20 fat cap off a 6-ounce steak, you can
Worst Drinks in Amer- eliminate more than
ica—but there's a high 100 calories and 16
proportion hiding in grams of fat. As an
less obvious places added bonus, you'll
like dressings and decrease your can-
sauces. Case in point: cer risk. When fat
Kraft Original derives a drips and sizzles at
full 80 percent of its the bottom of your
calories from sugar. grill, it produces
Look for a sauce with smoke that con-
no added sugar, or at tains carcinogenic
the very least, one that polycyclicaromatic
doesn't list sugar first hydrocarbons
on the ingredient state- (PAHs). Less fat,
ment. (I like Stubb's less cancer-causing
Original, which has half PAHs.
as much sugar as Kraft Fire Up Your Pro-
Original.) duce
Toss Fish on the Grill A 2008 Nutrition
Seafood consumption Research study
is linked to better overall health, and a suggestions in our Burger Topping found that increased fruit and vegeta-
2011 Turkish study found that compared Selector.) ble intake resulted in significant
to baked, fried, or microwaved fish, grilled weight loss over a 6-month period, but
Marinate unfortunately, most people take a
fish contained the highest levels of belly-
filling protein. (Check out these 6 Supers- If you're not using a spicy rub, then narrow, meat-only approach to grilling.
mart Seafood Choices!) Your best seafood- you should be using a marinade. The That's a bad move for your waistline,
shopping strategy? Avoid the section of acids tenderize tough meats and allow and it takes the joy out of grilling. Try
shrink-wrapped plastic trays at your local the herbs and seasonings to work grilling asparagus, Brussels sprouts, or
supermarket and shop at a market with a their way into the muscle, making lean eggplant, and you'll be a believer for
real fish counter. You'll get fresher, cleaner- cuts every bit as flavorful as their fat- life. You can even grill leafy greens. Try
tasting fish, and you'll be inclined to eat it tier—and more expensive— this with spinach: Clean the leaves
counterparts. (Use these 13 Spices and keep the stems intact. Place over
more frequently.
That Help You Lose Weight!) If that's a medium fire and grill for 3 to 5 min-
Read Meat Nutrition Labels not reason enough, consider this: Re- utes. Dress the greens with a drizzle of
search from the Food Science Institute olive oil, the juice of a lemon, and
The USDA recently imposed a law requiring some shaved Parmesan cheese. En-
grocers to display nutrition information on of Kansas State University found that
the polyphenols in marinades cut car- joy.
40 of the most common meat cuts, includ-
ing all ground meat and poultry products. cinogen levels in grilled foods by up to
(Learn more with this guide on USDA Nutri- 88 percent, allowing you to fight fat
and cancer at the same time.
Page 6 Convergent Commercial Quarterly
Volume 2, Issue 3
On a Lighter Side
Quarterly Quote
We’re old school. We don’t mind live communication.
Founded in 1961, Convergent Commercial has been a leader
in the commercial receivables management industry for over
50 years.
Convergent Commercial, Inc.
925 Westchester Avenue, First Floor Convergent Commercial Mission
White Plains, New York 10604-3540
914.421.7900 Fax 914.421.7923 To use our talent, technique and technology to maximize the
www.convergentusa.com
value of our clients’ receivables through respect for the debtor,
Boca Office
561.862.1701 effective collection/call center management, high ethical stan-
Atlanta Office dards and strict adherence to applicable laws, regulations and
770.512.3685
policies.
